Watt v. Energy Action Educational Foundation

No. 80-1464 (U.S. December 1, 1981)

ELR Digest

Reversing a decision of the District of Columbia Circuit, 10 ELR 20905, the Court holds that the Outer Continental Shelf Lands Act (OCSLA) does not require the Secretary of the Interior to experiment with non-cash-bonus bidding systems for leasing outer continental shelf (OCS) oil and gas tracts. The bidding system traditionally used by the Secretary was based on a fixed royalty rate plus an initial "cash bonus" payment which was the subject of bidding. This system was criticized by members of Congress as limiting competition since only major oil companies could afford to offer large cash bonuses on tracts of unknown value. Section 8 of the OCSLA was amended to require experimentation with other systems, but the Secretary experimented only with systems having a cash bonus bidding element. At the outset, the Court rules that the State of California has standing to challenge the Secretary's failure to experiment with non-cash-bonus systems, since both a "distinct and palpable injury" and a "fairly traceable" causal connection to the challenged conduct are shown. The state is entitled to a share of OCS leasing revenues and would be injured by the Secretary's failure to obtain a fair market return on the leases. On the merits, however, the Court concludes that § 8 does not preclude the Secretary's sole reliance on cash bonus systems. Rather, it leaves to the Secretary's discretion the choice of specified alternative systems, limited only by the necessity of reporting to Congress on the reasons for the choices made.Section 8 requires the use of the traditional cash bonus, fixed-royalty system for at least a portion of the acreage leased, and list other cash bonus systems among nine options for experimental use elsewhere; unfavorable references to the "cash bonus system" in the Act's legislative history refer only to the traditional cash bonus, fixed-royalty system and not to the alternative cash bonus systems.

The full text of the opinion is available from ELR (10 pp. $1.75, ELR Order No. C-1272).

Counsel for Petitioner
Louis F. Claiborne; Wade H. McCree Jr., Solicitor General
Department of Justice, Washington DC 20530
(202) 633-2208

Counsel for Respondent
John Silard, Joseph L. Rauh Jr.
Rauh, Silard & Lichtman
1001 Connecticut Ave. NW, Washington DC 20036
(202) 331-1795

Jonathan D. Schiller
Rogovin, Stern & Huge
1730 Rhode Island Ave. NW, Washington DC 20036
(202) 466-6464

O'Connor, J.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]